Dear All,
I am working with a manufacturing company in Gurgaon. Until now, we have been calculating earned leave (EL) based on the Gross salary. However, our directors are now instructing us to calculate EL based on Basic salary. Kindly assist me with this.
Harry
From India, Delhi
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3I am working with a manufacturing company in Gurgaon. Until now, we have been calculating earned leave (EL) based on the Gross salary. However, our directors are now instructing us to calculate EL based on Basic salary. Kindly assist me with this.
Harry
From India, Delhi
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EL shall be applicable on the gross salary. There is always reasoning and rationale behind any law. Suppose the employee is coming to the office, he shall receive the complete salary including all allowances such as HRA, Conveyance, Medical, etc. If he is on leave, then whether he will not receive HRA or other allowances. It should be based on the gross salary instead of Basic.
From India, Delhi
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From India, Delhi
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it can be paid in any foam mean it can be on basic & gross both but the taxability would be applicable on gross because as per law exemption can be given only on basic not on gross.
From India, New Delhi
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From India, New Delhi
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Dear Harry,
It is a matter of confusion. EL has been a long-time calculation in basic. Why? Here are the facts:
Basic >= Minimum wages per day * Total number of days present. For example, if the minimum wage is 170, then the basic per month is 4420.
So, all other allowances that you give him are actually helping him to come to this company to work. For instance, HRA. In order for him to come and work in an organization, he needs to have shelter. Therefore, you pay him for his shelter. It is additional money you give him to come and work. Only basic wages are the salary that you give for the work done.
If an employee is on leave, then he has not worked. Thus, you automatically cut his allowance too. So why pay him his house rent if he hasn't come for work? I hope I was not arrogant towards the employee's side.
Regards,
Yashwanth R HR Associate SKY Technologies
From India, Bangalore
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It is a matter of confusion. EL has been a long-time calculation in basic. Why? Here are the facts:
Basic >= Minimum wages per day * Total number of days present. For example, if the minimum wage is 170, then the basic per month is 4420.
So, all other allowances that you give him are actually helping him to come to this company to work. For instance, HRA. In order for him to come and work in an organization, he needs to have shelter. Therefore, you pay him for his shelter. It is additional money you give him to come and work. Only basic wages are the salary that you give for the work done.
If an employee is on leave, then he has not worked. Thus, you automatically cut his allowance too. So why pay him his house rent if he hasn't come for work? I hope I was not arrogant towards the employee's side.
Regards,
Yashwanth R HR Associate SKY Technologies
From India, Bangalore
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Dear Harry,
The calculation of leave encashment is always based on the basic salary because other components support the basic salary. Therefore, there is no need to include payment for other supportive components.
I agree with Mr. Yashwanth.
Chill HR
[Facebook link: https://www.facebook.com/HRGang]
From India, Gurgaon
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The calculation of leave encashment is always based on the basic salary because other components support the basic salary. Therefore, there is no need to include payment for other supportive components.
I agree with Mr. Yashwanth.
Chill HR
[Facebook link: https://www.facebook.com/HRGang]
From India, Gurgaon
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Let's assume that I am on leave for four days and apply for EL for these 4 days of leave. Here, I will get the entire four days off, which I believe will be equal to my four days of gross salary (FULL SALARY) not basic. My point is when it comes to calculations, you are advising me to base it on Basic, but for the purpose of leave, I consider it as full day's salary. This is what I am unable to understand.
From India, Delhi
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From India, Delhi
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Dear Harry,
What I suggested in my last post is the same as what the majority of organizations are following. During the working period, if one needs EL (earned leave), it means a full-day salary, not just the basic pay. However, leave encashment entirely depends on the company's policy.
Case 1: If the company policy states that the company will deduct/pay the notice period based on the basic salary, then the leave encashment must also be calculated based on the basic salary.
Case 2: If the notice period deduction/payment is based on the Gross Salary, then the leave encashment must be calculated on the Gross salary only.
The policy regarding leave encashment is completely dependent on the notice period, and this should be clearly defined at the beginning with the office policy, rather than being determined at the time of encashing leaves and trying to find a way out.
Chill HR!!
https://www.facebook.com/HRGang
From India, Gurgaon
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What I suggested in my last post is the same as what the majority of organizations are following. During the working period, if one needs EL (earned leave), it means a full-day salary, not just the basic pay. However, leave encashment entirely depends on the company's policy.
Case 1: If the company policy states that the company will deduct/pay the notice period based on the basic salary, then the leave encashment must also be calculated based on the basic salary.
Case 2: If the notice period deduction/payment is based on the Gross Salary, then the leave encashment must be calculated on the Gross salary only.
The policy regarding leave encashment is completely dependent on the notice period, and this should be clearly defined at the beginning with the office policy, rather than being determined at the time of encashing leaves and trying to find a way out.
Chill HR!!
https://www.facebook.com/HRGang
From India, Gurgaon
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Dear Harry, Good Morning...!!! All leaves are always calculated on Basic + DA, not on Gross Salary... Leave Encashment = Basic + DA /30 X No. of Leaves. It includes SL, PL & CL. Regards, Vani M HR
From India, Bangalore
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From India, Bangalore
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There had been repeated posts on this subject. Detailed discussions have taken place in this forum on this subject. However, I am repeating certain points as it has come up for discussion once again:
1. When an employee is availing leave, whether it is earned leave, casual leave, or sick leave, their full salary is given. If an employee's basic salary is Rs 1000 and their other allowances are Rs 1000, then they receive the basic salary plus other allowances in full when they avail leave with pay.
2. When an employee receives encashment of leave, generally basic salary plus DA are given. The argument here is that when an employee avails encashment, their HRA and other allowances are already included in the salary. The logical argument is that there is no need to pay the same amount twice.
From India, Chennai
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1. When an employee is availing leave, whether it is earned leave, casual leave, or sick leave, their full salary is given. If an employee's basic salary is Rs 1000 and their other allowances are Rs 1000, then they receive the basic salary plus other allowances in full when they avail leave with pay.
2. When an employee receives encashment of leave, generally basic salary plus DA are given. The argument here is that when an employee avails encashment, their HRA and other allowances are already included in the salary. The logical argument is that there is no need to pay the same amount twice.
From India, Chennai
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(Fact Checked)-The user's reply contains accurate information regarding the calculation of leave encashment based on Basic and DA. The explanation provided is correct. (1 Acknowledge point)
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Dear Harry, SL & PL will be encashed every financial year. Sorry CL can not be encashed and end of the year CL will get laps. Regards, Vani M HR
From India, Bangalore
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From India, Bangalore
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Encashment at the end of the year is an individual company's policy decision. Some companies used to offer encashment of CL just to dissuade people from taking leave often. I have seen this practice in very few companies in the seventies and eighties. Encashment is not a legal right except at the time of cessation of employment, and this is restricted to Earned Leave.
In one company where I was working, the management gave me encashment of Sick Leave even though I had been there for only three years. They gave it as a matter of goodwill. I have also given encashment of CL for a certain category of employees.
From India, Chennai
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In one company where I was working, the management gave me encashment of Sick Leave even though I had been there for only three years. They gave it as a matter of goodwill. I have also given encashment of CL for a certain category of employees.
From India, Chennai
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Dear Vani,
I have the same doubt as Gurgoun HR. The thing is only EL/PL is cashable at the end of the year. It is stated as Leave with Wages in the Factories Act, i.e., 1 day EL for every 20 days.
SL is always calculated in two ways (60 days once). If I'm wrong, please correct me. One for employees covered under ESIC and the rest. If covered under ESIC, the employee shall give a writ to the HR dept. The HR shall coordinate with the ESIC official and get the payment done for the employee through the bank. If the employee is covered under the Medical allowance (i.e., above 15000), then the company shall avail SL for the employee.
Hope I was right... Please correct me...
From India, Bangalore
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I have the same doubt as Gurgoun HR. The thing is only EL/PL is cashable at the end of the year. It is stated as Leave with Wages in the Factories Act, i.e., 1 day EL for every 20 days.
SL is always calculated in two ways (60 days once). If I'm wrong, please correct me. One for employees covered under ESIC and the rest. If covered under ESIC, the employee shall give a writ to the HR dept. The HR shall coordinate with the ESIC official and get the payment done for the employee through the bank. If the employee is covered under the Medical allowance (i.e., above 15000), then the company shall avail SL for the employee.
Hope I was right... Please correct me...
From India, Bangalore
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Corrected Text:
"Section 79 (3) of the Factory Act 1948 states that if a worker is discharged or dismissed from service, quits his employment, is superannuated, or dies while in service during the course of the calendar year, he or his heir or nominee, as the case may be, shall be entitled to wages in lieu of the quantum of leave to which he was entitled immediately before his discharge, dismissal, quitting of employment, superannuation, or death, calculated at the rates specified in sub-section (1). Even if he had not worked for the entire period specified in sub-section (1) or sub-section (2) making him eligible to avail of such leave, such payment shall be made. Now when we talk about wages, it will come under the Payment of Wages Act, not the Minimum Wages Act. So, the rule, I believe, is contradictory in itself."
Harry
From India, Delhi
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"Section 79 (3) of the Factory Act 1948 states that if a worker is discharged or dismissed from service, quits his employment, is superannuated, or dies while in service during the course of the calendar year, he or his heir or nominee, as the case may be, shall be entitled to wages in lieu of the quantum of leave to which he was entitled immediately before his discharge, dismissal, quitting of employment, superannuation, or death, calculated at the rates specified in sub-section (1). Even if he had not worked for the entire period specified in sub-section (1) or sub-section (2) making him eligible to avail of such leave, such payment shall be made. Now when we talk about wages, it will come under the Payment of Wages Act, not the Minimum Wages Act. So, the rule, I believe, is contradictory in itself."
Harry
From India, Delhi
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Dear All,
Leave encashment would be on gross salary. Please refer to the Factory Act - Leave module. It is clearly mentioned in the Factory Act that leave encashment is based on gross salary, including all allowances that are regularly paid every month.
Regards,
From India, Mumbai
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Leave encashment would be on gross salary. Please refer to the Factory Act - Leave module. It is clearly mentioned in the Factory Act that leave encashment is based on gross salary, including all allowances that are regularly paid every month.
Regards,
From India, Mumbai
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Dear Yashwanth,
Don't get confused. If the employee has taken leave, then it's not a problem. If the employee left with SL, it will be encashed at the end of the year.
Dear Faruk Shaik,
EL & SL are calculated on Basic + DA.
Regards,
Vani M
From India, Bangalore
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Don't get confused. If the employee has taken leave, then it's not a problem. If the employee left with SL, it will be encashed at the end of the year.
Dear Faruk Shaik,
EL & SL are calculated on Basic + DA.
Regards,
Vani M
From India, Bangalore
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Earn leave calculation must be on gross as per the Factory Act. The reason for paying on basic is that only those factories that provide a leave policy better than what is mandated under the Factory Act are exempted from this rule. Under the Factory Act, they can pay on basic.
From India, Faridabad
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From India, Faridabad
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Dear All,
It actually depends on individual companies, and very few companies calculate the leave encashment based on Gross salary to attract and retain employees. Regarding Sick leave, it is encashed so that employees would not take sick leave unnecessarily.
Regards, Vani M HR
From India, Bangalore
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It actually depends on individual companies, and very few companies calculate the leave encashment based on Gross salary to attract and retain employees. Regarding Sick leave, it is encashed so that employees would not take sick leave unnecessarily.
Regards, Vani M HR
From India, Bangalore
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Section 80 of the Factories Act states that if a worker avails leave, he shall be paid for the days of leave at the average total earnings, excluding OT and bonus, but including DA and the cash equivalent of concessional sale of food grains or other articles. In practice, when an employee is on Earned Leave (EL), full wages are paid. Section 80 is not intended for EL surrender. The concept of EL surrender was not present before the legislature in 1948. Leave surrender is not a legal right. Section 79 deals with payment in lieu of leave when the employee's service comes to an end, not regarding EL surrender while the employee is in service. Leave surrender and the payment for that depend on each company's policy and practice.
VARGHESE MATHEW
9961266966
From India, Thiruvananthapuram
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VARGHESE MATHEW
9961266966
From India, Thiruvananthapuram
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Dear Harry,
The query has some bugs in it. Is it about the calculation of EL or the calculation of salary during EL? The answers would depend on the query. Presuming that you require clarification only on:
1) How to calculate leave salary for the EL one avails under the Factories Act/Rules, as you mention you are in a manufacturing company.
2) The wages for EL are not "Encashment of EL" or "Encashment on cessation of employment." So this discussion is not about that.
If so, let us see what the Factories Act/Rules say about it -
Wages during Leave Period: For the period of leave allowed to a worker according to rules, he shall be paid at a rate equal to the daily average of his total full-time earnings for the days on which he actually worked during the month immediately preceding his leave. The average rate is to be calculated, exclusive of any overtime and bonus, but inclusive of dearness allowance and the cash equivalent of the advantage accruing through the concessional sale to the worker of food-grains and other articles. The cash equivalent referred to above is to be computed according to the method used when calculating the extra wages payable for overtime work. (See. post) - Sec. 80
Also, go through similar discussions in these links:
- <link no longer exists - removed>
- https://www.citehr.com/73083-india-l...es-people.html
Kumar S.
From India, Bangalore
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The query has some bugs in it. Is it about the calculation of EL or the calculation of salary during EL? The answers would depend on the query. Presuming that you require clarification only on:
1) How to calculate leave salary for the EL one avails under the Factories Act/Rules, as you mention you are in a manufacturing company.
2) The wages for EL are not "Encashment of EL" or "Encashment on cessation of employment." So this discussion is not about that.
If so, let us see what the Factories Act/Rules say about it -
Wages during Leave Period: For the period of leave allowed to a worker according to rules, he shall be paid at a rate equal to the daily average of his total full-time earnings for the days on which he actually worked during the month immediately preceding his leave. The average rate is to be calculated, exclusive of any overtime and bonus, but inclusive of dearness allowance and the cash equivalent of the advantage accruing through the concessional sale to the worker of food-grains and other articles. The cash equivalent referred to above is to be computed according to the method used when calculating the extra wages payable for overtime work. (See. post) - Sec. 80
Also, go through similar discussions in these links:
- <link no longer exists - removed>
- https://www.citehr.com/73083-india-l...es-people.html
Kumar S.
From India, Bangalore
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Earned Leaves when consumed are calculated on Gross Salary basis, however while en cashing the balance EL normally Basic+DA is used as base.
From India, Pune
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From India, Pune
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Dear Harry,
EL = Basic + DA/26 * Remaining days, as simple as this. But if an employee is on leave, you deduct the payment from gross, not only from basic, so pay them based on Gross. For you, the formula will be: EL = Gross/26 * remaining days. CL and SL should never be encashed.
Vikas Sharma
Jodhpur
From India, Jodhpur
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EL = Basic + DA/26 * Remaining days, as simple as this. But if an employee is on leave, you deduct the payment from gross, not only from basic, so pay them based on Gross. For you, the formula will be: EL = Gross/26 * remaining days. CL and SL should never be encashed.
Vikas Sharma
Jodhpur
From India, Jodhpur
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Dear Harry,
If your question pertains to "workman," the EL should be considered in the Basic+DA+and allowances. In short, the amount he will get (wage for a day) if he avails that leave.
In the case of non-workmen (executives), the company can have its own policy on whether to pay on Basic only or on the total CTC, depending on the objective - whether you want employees to avail more leaves to help them maintain work-life balance or if you want them to put more days for the company and pay for it to motivate them.
Hope this helps you.
Regards,
Shailesh Parikh
Vadodara, Gujarat
99 98 97 10 65
From India, Mumbai
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If your question pertains to "workman," the EL should be considered in the Basic+DA+and allowances. In short, the amount he will get (wage for a day) if he avails that leave.
In the case of non-workmen (executives), the company can have its own policy on whether to pay on Basic only or on the total CTC, depending on the objective - whether you want employees to avail more leaves to help them maintain work-life balance or if you want them to put more days for the company and pay for it to motivate them.
Hope this helps you.
Regards,
Shailesh Parikh
Vadodara, Gujarat
99 98 97 10 65
From India, Mumbai
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(Fact Checked)-The user reply is partially correct. For workmen, EL should be calculated on Basic+DA+allowances. For non-workmen, companies can choose to pay on Basic or total CTC based on policy. (1 Acknowledge point)
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Dear All: EL is to be encashed on Basic only & not on gross. It is in line with IT Act 1961, wherein exemption is given only on encashment done on Basic. Rgds Dxion, Tata Trent, Pune
From India, Mumbai
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From India, Mumbai
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Dear All, Kindly advise whether EL is calculated on the basis of number of days in year or 30 days. Thanxs & Regards C.M.Mohla
From India, Delhi
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From India, Delhi
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It depends on your policy. If you are allowing strictly as per FA Act, it's one day for every 20 worked days. If it is an establishment in Kerala, there are flat 12 EL for an employee who has worked in the previous year for 240 days. This can be accumulated to 24 days. In factories, this 240-day criteria is also applicable.
Varghese Mathew
9961266966
From India, Thiruvananthapuram
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Varghese Mathew
9961266966
From India, Thiruvananthapuram
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(Fact Checked)-The user's reply contains accurate information regarding the calculation of earned leave (EL) based on the Factories Act and specific rules for establishments in Kerala. No corrections needed. (1 Acknowledge point)
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Dear Colleagues,
I agree with our seniors that EL/PL Encashment is based on Basic+DA, whether working or ex-employee. In other words, EL/PL = Basic+DA / 26 * No. of Days.
Additionally, EL/PL availed/leave taken is calculated on Gross Salary, which means an employee working within a company has taken leave(s) for personal exigencies. This calculation is expressed as EL/PL = Gross Salary / 30 * No. of Days.
I hope I am not mistaken; however, if I am, I kindly request our seniors to correct me and share your knowledge with us.
Thank you.
From India, Mumbai
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I agree with our seniors that EL/PL Encashment is based on Basic+DA, whether working or ex-employee. In other words, EL/PL = Basic+DA / 26 * No. of Days.
Additionally, EL/PL availed/leave taken is calculated on Gross Salary, which means an employee working within a company has taken leave(s) for personal exigencies. This calculation is expressed as EL/PL = Gross Salary / 30 * No. of Days.
I hope I am not mistaken; however, if I am, I kindly request our seniors to correct me and share your knowledge with us.
Thank you.
From India, Mumbai
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Hi! Can anybody tell me from which time is E.L. should be counted, from the date of appointment or from the date of confirmation? Adhip Sen_gupta
From India, Patna
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From India, Patna
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(Fact Checked)-The Earned Leave (EL) should be counted from the date of appointment, not confirmation. (1 Acknowledge point)
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Again a lot depends on Co policy.Better to count it from DOJ but allow to avail it after confirmation. Varghese Mathew
From India, Thiruvananthapuram
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From India, Thiruvananthapuram
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EL should always be counted from the date of appointment as per all statutory provisions be it Factoriest act or Shops and Establishment act or Mines act or Palanatations Act etc
From India, Chennai
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From India, Chennai
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(Fact Checked)-EL should be counted from the date of appointment as per various statutory provisions like Factories Act, Shops and Establishment Act, etc. (1 Acknowledge point)
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It is amusing to see so many diverse viewpoints and one's own interpretation of the query!
It is appalling to see so much confusion with a simple concept as Earned Leave, and I think it calls for an Act to have a Certifying Body for HR Managers.
In what direction should a company act if the concerned HRs give these kinds of contrary opinions? Imagine the situation if the matter was about Medicine & Surgery, Civil Engineering, or say, Finance? One can imagine the result.
I appreciate the correct inputs from Kumar S. and T. Sivasankaran.
Regards.
From India, Delhi
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It is appalling to see so much confusion with a simple concept as Earned Leave, and I think it calls for an Act to have a Certifying Body for HR Managers.
In what direction should a company act if the concerned HRs give these kinds of contrary opinions? Imagine the situation if the matter was about Medicine & Surgery, Civil Engineering, or say, Finance? One can imagine the result.
I appreciate the correct inputs from Kumar S. and T. Sivasankaran.
Regards.
From India, Delhi
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Dear Faruk,
Please review the following:
Factories Act, 1948 [sec - 80 (1)]:
For the leave allowed to him under Section 78 or Section 79, as the case may be, a worker shall be entitled to wages at a rate equal to the daily average of his total full-time earnings for the days on which he actually worked during the month immediately preceding his leave, exclusive of any overtime and bonus but inclusive of dearness allowance and the cash equivalent of the advantage accruing through the concessional sale to the worker of food grains and other articles.
They never mentioned other allowances. It's that Pay the Basic + DA + Cash equivalent that you would have paid if he would have come to the company.
Please correct me if I'm wrong.
From India, Bangalore
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Please review the following:
Factories Act, 1948 [sec - 80 (1)]:
For the leave allowed to him under Section 78 or Section 79, as the case may be, a worker shall be entitled to wages at a rate equal to the daily average of his total full-time earnings for the days on which he actually worked during the month immediately preceding his leave, exclusive of any overtime and bonus but inclusive of dearness allowance and the cash equivalent of the advantage accruing through the concessional sale to the worker of food grains and other articles.
They never mentioned other allowances. It's that Pay the Basic + DA + Cash equivalent that you would have paid if he would have come to the company.
Please correct me if I'm wrong.
From India, Bangalore
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Dear All,
As per the Act, whether it's the S&E or Factory's Act, it should be 36 days per annum, i.e., 12 days of EL, 12 days of SL, and 12 days of CL.
Sick Leave (SL) Policy
SL, which stands for Sick Leave, can be carried over to the next year (at the discretion of the management) as the employee may not be sick in the current year but could be next year. For this purpose, it is carried over to the next year and is not encashable.
Casual Leave (CL) and Earned Leave (EL) or Paid Leave (PL) Policy
For CL and EL or PL, it is encashable by the company. In some companies, LTA can be adjusted against their PL after submitting proof.
Leave Policy Calculation
According to the Act, the leave policy is based on the calculation of BASIC + DA OR VDA, not gross, as this affects the employer outflow. BASIC + DA OR VDA divided by 30 multiplied by the number of days available (basic will be the last salary drawn as per the policy of leave).
Any deviation, please inform me.
Regards,
Vijayalakshmi J
Payroll Management Consultant
From India, Chennai
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As per the Act, whether it's the S&E or Factory's Act, it should be 36 days per annum, i.e., 12 days of EL, 12 days of SL, and 12 days of CL.
Sick Leave (SL) Policy
SL, which stands for Sick Leave, can be carried over to the next year (at the discretion of the management) as the employee may not be sick in the current year but could be next year. For this purpose, it is carried over to the next year and is not encashable.
Casual Leave (CL) and Earned Leave (EL) or Paid Leave (PL) Policy
For CL and EL or PL, it is encashable by the company. In some companies, LTA can be adjusted against their PL after submitting proof.
Leave Policy Calculation
According to the Act, the leave policy is based on the calculation of BASIC + DA OR VDA, not gross, as this affects the employer outflow. BASIC + DA OR VDA divided by 30 multiplied by the number of days available (basic will be the last salary drawn as per the policy of leave).
Any deviation, please inform me.
Regards,
Vijayalakshmi J
Payroll Management Consultant
From India, Chennai
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As per Factories Act it is not 36 days .There is no provision of CL and SL in Factories Act.Regarding EL encashment Mr Yeshwant is right. Varghese Mathew 04712542059
From India, Thiruvananthapuram
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From India, Thiruvananthapuram
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Dear Sir,
My name is Ashish Rana. I am working in a Delhi-based company. I just want to know if our manpower is working as a contractor in a Haryana-based company (our customer), then is it necessary for us to pay the leave encashment to our staff as per the "Haryana Leave with Wages Rules" or should we pay the leave encashment as per the "Delhi Shops & Establishment Rules."
Please help.
Regards,
Ashish Rana
From India, Jaipur
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My name is Ashish Rana. I am working in a Delhi-based company. I just want to know if our manpower is working as a contractor in a Haryana-based company (our customer), then is it necessary for us to pay the leave encashment to our staff as per the "Haryana Leave with Wages Rules" or should we pay the leave encashment as per the "Delhi Shops & Establishment Rules."
Please help.
Regards,
Ashish Rana
From India, Jaipur
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A number of HR personnel have stated that Earned Leave (EL) should be based on Basic Salary. I am unsure on what grounds they made this claim. Everyone should refer to the Factory Act as it provides clarity on all queries regarding this matter; read Chapter 5. EL payment should be calculated based on the total earnings of employees working full-time. (Note: Factories can be exempted from this provision if they offer better leave facilities to employees, subject to approval in the company's standing orders). Therefore, it is evident that EL should be based on the gross salary. I am also aware that many companies provide EL encashment based on the basic salary, which is entirely unlawful unless they have an approved leave policy in place.
From India, Faridabad
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From India, Faridabad
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Hello Vani,
Leave encashment does not include the SL and CLs. As per most of the Shops and Establishment acts, leave encashment is only on Earned leave. The calculation is on Basic generally and varies from company to company as a practice. Please refer to the appropriate legal positions before posting anything.
From India, Hyderabad
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Leave encashment does not include the SL and CLs. As per most of the Shops and Establishment acts, leave encashment is only on Earned leave. The calculation is on Basic generally and varies from company to company as a practice. Please refer to the appropriate legal positions before posting anything.
From India, Hyderabad
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(Fact Checked)-[The user's reply is generally correct. Leave encashment typically includes only earned leave and the calculation is often based on the basic salary, varying by company practice. However, it is advisable to always refer to the relevant legal provisions for accurate information.] (1 Acknowledge point)
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please tell me who to calculate leave wages for full final settlement time which id act
From India, Hyderabad
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From India, Hyderabad
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(Fact Checked)-The calculation of leave wages for full and final settlement should be based on the Basic salary, not on the Gross salary. This is in line with labor laws and best practices. (1 Acknowledge point)
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The calculation of earned leaves (also known as accrued leaves or annual leave) and whether it's based on gross salary or basic salary depends on company policy and local regulations. Here's a breakdown of each approach:
Earned Leaves Based on Gross Salary:
In this approach, earned leaves are calculated based on the employee's total gross salary, which includes all components such as basic salary, allowances, bonuses, and other benefits. Using gross salary for earned leave calculations may result in a higher accrual rate, as it takes into account all forms of compensation received by the employee. This method is often used by companies that want to provide employees with leave benefits that reflect their total compensation package.
Earned Leaves Based on Basic Salary:
Alternatively, earned leaves can be calculated based only on the employee's basic salary, excluding other components such as allowances and bonuses. Using basic salary for earned leave calculations may result in a lower accrual rate compared to using gross salary. This method is commonly used by companies as it provides a more stable and consistent basis for calculating leave entitlements, especially when other components of compensation may vary. It's essential for employers to clearly define their policy regarding earned leave calculations in their employment contracts or company handbook to avoid any confusion or disputes. Additionally, they should ensure compliance with local labor laws and regulations, which may specify requirements for earned leave entitlements and calculation methods.
Ultimately, whether earned leaves are based on gross salary or basic salary depends on various factors, including company practices, employee agreements, and legal requirements. Employers should carefully consider these factors when determining the most appropriate approach for their organization.
From India, Mumbai
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Earned Leaves Based on Gross Salary:
In this approach, earned leaves are calculated based on the employee's total gross salary, which includes all components such as basic salary, allowances, bonuses, and other benefits. Using gross salary for earned leave calculations may result in a higher accrual rate, as it takes into account all forms of compensation received by the employee. This method is often used by companies that want to provide employees with leave benefits that reflect their total compensation package.
Earned Leaves Based on Basic Salary:
Alternatively, earned leaves can be calculated based only on the employee's basic salary, excluding other components such as allowances and bonuses. Using basic salary for earned leave calculations may result in a lower accrual rate compared to using gross salary. This method is commonly used by companies as it provides a more stable and consistent basis for calculating leave entitlements, especially when other components of compensation may vary. It's essential for employers to clearly define their policy regarding earned leave calculations in their employment contracts or company handbook to avoid any confusion or disputes. Additionally, they should ensure compliance with local labor laws and regulations, which may specify requirements for earned leave entitlements and calculation methods.
Ultimately, whether earned leaves are based on gross salary or basic salary depends on various factors, including company practices, employee agreements, and legal requirements. Employers should carefully consider these factors when determining the most appropriate approach for their organization.
From India, Mumbai
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(Fact Checked)-The user reply provides accurate information regarding the calculation of earned leaves based on gross salary versus basic salary. The response is well-detailed, informative, and aligns with company policies and local regulations. (1 Acknowledge point)
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(Fact Checked)-The calculation of Earned Leave (EL) based on Basic salary is a common practice in many organizations as per labor laws. EL should be calculated on Basic salary, not Gross salary. (1 Acknowledge point)